Getting Ahead of ASML Earnings

Research Desk · October 13, 2026

ASML Holding N.V. logo, via Wikimedia Commons. Trademark of ASML, shown for editorial identification.

Earnings season opened this morning with the big banks. JPMorgan, Goldman Sachs, Wells Fargo and Citigroup all reported before the bell.

Those numbers will tell investors how the consumer and the dealmakers are doing. But for anyone holding technology in a retirement account, the report that matters most this week lands tomorrow.

That is when ASML Holding (NASDAQ: ASML) posts its third quarter. Most Americans have never heard the name. Almost every AI chip they read about depends on it.

On Monday, ahead of the report, UBS reiterated its buy rating and the shares rose about 3%. Bank of America and Barclays had made the same call days earlier.

The Printing Press Behind the AI Boom

A modern chip is not carved. It is printed, layer by layer, with light.

Think of a photo lab enlarging a negative onto paper, except in reverse. ASML's machines shrink a circuit pattern and project it onto a silicon wafer, with features thousands of times thinner than a human hair.

To get that fine, the newest machines use extreme ultraviolet light. They make it by hitting tiny droplets of molten tin with a laser, tens of thousands of times every second.

Each machine is roughly the size of a city bus and ships in pieces across dozens of freight containers. No other company in the world sells one.

Here is how that works in real life. When Nvidia designs a new AI processor, it does not build it. Taiwan Semiconductor does, and TSMC cannot print the most advanced chips without ASML's EUV tools on the factory floor.

A Quarter That Beat Its Own Guidance

The second quarter delivered €9.3 billion in sales, above the top of management's range. Gross margin came in at 54%, also above guidance.

Net income reached €2.9 billion. Earnings per share climbed to €7.59, up from €5.90 a year earlier.

The surprise came from the service side. Sales from maintaining and upgrading machines already in the field hit about €2.8 billion, close to €300 million more than expected.

That matters for a long-term holder. Every machine ASML sells becomes a customer for decades of service and upgrades, much like a car dealer whose real profit is in the service bay.

Guidance Points Higher

Management expects third-quarter sales between €11 billion and €12 billion, a big step up from the second quarter. Gross margin is guided to between 55% and 57%.

For the full year, ASML raised its sales outlook to between €43 billion and €45 billion. Analysts expect fourth-quarter earnings to climb even further, to about $15.55 a share.

Cash Flowing Back to Shareholders

ASML is not a high-yield stock. The dividend yields only about half a percent at today's price.

But it is growing fast. The latest interim dividend of €1.88 a share was up about 17% from €1.60 a year ago.

A note for income investors: ASML pays three equal interim dividends and a larger final one each spring. Compare interim to interim, or the latest check can look like a cut when it is actually a raise.

On top of that, the company bought back about €1.1 billion of its own stock in each of the first two quarters under its 2026 to 2028 buyback program.

The Blind Spot Worth Knowing

Here is the honest drawback. Starting this year, ASML stopped publishing its quarterly order bookings, the number investors once watched most closely.

Management says the figure was too lumpy to be useful. It also means shareholders have less advance warning if orders cool.

China is the other open question. Export rules already bar ASML from selling its most advanced machines there, and in late September the chief executive warned that overly broad curbs could backfire by speeding up China's own chip industry.

What the Price Already Assumes

Over the past year the shares have run from a low near $716 to a high near $2,000. At about $1,815 they trade near 61 times trailing earnings and roughly 40 times this year's expected earnings.

The average analyst target sits near $2,190, about 20% above the current price. UBS expects growth above 30% to continue.

The bear case has a number too. If the market decided ASML deserved 30 times this year's earnings instead of 40, the stock would sit near $1,350, roughly 25% lower.

That is the kind of reset a soft quarter, a guidance trim, or new China restrictions could trigger. Options traders are pricing a move of about 9% in either direction after tomorrow's report.

The Bottom Line

ASML owns a monopoly on the most important tool in the AI buildout. Whoever wins the race to build smarter chips, they have to buy ASML's machines first.

That position has made it one of the best-performing large companies in the world over the past year. It has also given it a price that leaves little room for a stumble.

For a patient investor who already owns the AI story through the chip designers, ASML is the company that supplies all of them. Tomorrow's report will show whether the orders behind that story are still growing.